Cryptocurrency company Ripple Labs has filed a complaint against YouTube for violating the Lanham Act, California’s Statutory and Common Law Right of Publicity and California’s Unfair Competition Law. The complaint was filed in the California Northern District Court. Ripple Labs is represented by Boies Schiller &Flexner.
Ripple Labs claims that over the past few months the company has “suffered – and continue[s] to suffer – irreparable harm to their public image, brand, and reputation as a direct consequence of YouTube’s deliberate and inexplicable failure to address a pervasive and injurious fraud occurring on its platform.” The scam is called “the XRP Giveaway” and affects Ripple, its CEO Brad Garlinghouse, and XRP holders. XRP is a digital asset that Ripple users can use for sourcing liquidity in transactions. The scam involves “spear phishing, hacked YouTube accounts, and the misappropriation of Mr. Garlinghouse’s likeness and Ripple marks.” Ripple Labs states that YouTube has not acted after Ripple requested for the company to take action to stop this fraudulent activity. Ripple is uncertain how many individuals fell for the scam, but notes that millions have viewed the related videos. Additionally, a “single instance of the Scam reportedly resulted in $15,000 of stolen XRP. To date, Plaintiffs believe and allege that the Scam has defrauded victims out of millions of XRP valued at hundreds of thousands of dollars.”
Ripple states that the company and its CEO’s reputation have been harmed as a result of this scam, for example, “[b]y infringing on Ripple’s protected trademarks and misappropriating Mr. Garlinghouse’s image and likeness, the Scam fosters the false belied that Ripple and Mr. Garlinghouse are somehow associated with or to blame for the Scam (they are not).” Ripple has requested that “YouTube take action to stop the Scam and prevent further harm.” However, they add that they believe that YouTube has failed to take any action despite YouTube promoting content regulation on its platform.
The plaintiffs state that YouTube has not only hosted the scam, failed to take action to stop the scam and prevent future harm, but it has also “assisted the Scam and accelerated its reach.” This includes through ads, which promote the scam through “video discovery ads,” which YouTube profits from. Additionally, after repeated reports about these scams, “YouTube then approved them, uploaded them, endorsed them, and optimized them to attract as many YouTube users and clicks as possible based on its algorithms and search engine optimization techniques.” If a user clicks on the ad, they are taken to a scam channel.
The scam works through targeted email spear-phishing directed at a valid YouTube creator with a lot of followers, in this case, Ripple and its CEO. When the creator responds to the email, he “unknowingly and unintentionally” shares his YouTube account credentials with the attacker. The phished credentials are “used to strip the creator’s YouTube channel(s) of its content (including all videos) and to transform it into a channel that impersonates Ripple’s and/or Mr. Garlinghouse’s official channel.” The hacked channel now resembles and impersonates the “official” valid channel of Ripple and Garlinghouse. These scam accounts infringe Ripple’s trademarks, such as its name and logo, and misappropriate Garlinghouse’s likeness, including his name and image. The hacked accounts run public content of Ripple and Garlinghouse, such as an interview. This content features protected trademark information. Overlaid on top of the videos is text telling viewers how to learn more about the scam “giveaway.” For example, stating, “Details About The Giveaway Are In The Description.” The description provides more information about the “giveaway” scam. Viewers are informed to send XRP to a specific virtual wallet and the viewer will receive more XRP in return. However, once the viewer sends the XRP it is gone and they do not receive any XRP.
Ripple has submitted 49 takedown requests directly to YouTube since November 2019. There have been an additional 305 takedown requests for accounts and channels impersonating Garlinghouse or infringing Ripple’s trademarks. YouTube did not address these requests. Additionally, new accounts and elements relating to the scam continue to be posted on YouTube. While YouTube failed to take action to remediate the situation, it has also not taken any initiative to prevent this from occurring in the future. Additionally, other YouTube creator accounts have been hacked and changed to post content about Ripple’s fake “giveaway.” As a result of YouTube’s failure to act, Ripple and Garlinghouse have suffered harm, specifically to their reputation.
The plaintiffs are accusing YouTube of trademark infringement via these hacked accounts impersonating them; statutory and common law misappropriation of the right of publicity through the misappropriation of Garlinghouse’s identity; and California’s Unfair Competition Law through the previously mentioned violations. Ripple has sought a preliminary and permanent injunction to prevent and prohibit current and future violations, an award for damages, recovery from YouTube’s unjust enrichment, an award for costs and fees, pre- and post-judgment interest and any other relief as determined by the court.